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Philippines' International Investment Position as of end-June 2017 Posts Higher Net Liability Position


The country’s preliminary net external liability position1 as of end-June 2017 increased to US$33.8 billion from US$29.2 billion as of end-March 2017. Total external financial liabilities increased by 3.2 percent, surpassing the 0.9 percent growth in total external financial assets. As of  end-June 2017, total external financial liabilities amounted to US$198.3 billion, while total external financial assets stood at US$164.5 billion. Compared to the same period in 2016, however, the country’s net external liability position as of end-June 2017 decreased by 0.5 percent compared to the US$33.9 billion posted as of end-June 2016. The slight improvement in the net IIP during the period was due mainly to the US$1.8 billion expansion in external financial assets which outpaced the US$1.7 billion increase in external financial liabilities.

The growth in external financial liabilities during the quarter was due mainly to positive price revaluation of non-residents’ holdings of domestic equity securities and equity capital. Inflows of foreign direct and portfolio investments likewise contributed to the increase in the country’s net external financial liability position. Foreign direct investments (FDI) recorded a 4.9 percent growth on the back of the country’s sustained economic growth performance and prospects. Foreign portfolio investments (FPI) also rose by 4.8 percent, reflecting the 7.3 percent growth in the Philippine Stock Exchange Index (PSEi).

Meanwhile, the build-up in external financial assets during the quarter was driven mainly by the increase in other investments, particularly in the form of loans extended to non-residents, as well as the accumulation of the country’s reserve assets.

Across sectors, only the Bangko Sentral ng Pilipinas (BSP) maintained a net external asset position as of end-June 2017. The other major sectors – Deposit-taking Corporations except the Central Bank (Banks), the General Government, and Other Sectors – remained net users of foreign resources as they posted net external liability positions. The BSP continued to account for the largest share of the Philippines’ total external financial claims on the rest of the world at 49.5 percent. The BSP’s external financial assets totaled US$81.4 billion, the bulk of which consisted of gross international reserves which grew by US$427 million to reach US$81.3 billion as of end-June 2017.

By type of instrument, about half (or US$81.3 billion) of residents’ total external financial assets were reserve assets held by the BSP. Direct investments in the form of debt instruments (or intercompany lending) and equity capital placements in foreign affiliates accounted for 15.3 percent and 12.1 percent of total external financial assets, respectively.

The Other Sectors’ total external financial liabilities comprised almost two-thirds (65.0 percent) of the country’s total external liabilities at US$128.8 billion as of end-June 2017. These were mostly
non-residents’ placements in equity capital and debt instruments issued by local affiliates, and loans extended by non-residents to local corporates.

By type of instrument, the country’s total external financial liabilities to the rest of the world continued to consist mostly of non-residents’ holdings of equity securities issued by residents and equity capital in resident affiliates, and outstanding loans extended by non-resident creditors.


1 Based on the International Monetary Fund’s Balance of Payments and International Investment Position Manual, 6th edition (BPM6)

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